Amazon Posts Surprise Profit For Q3 2015; Heavy Investment Planned in India As Festival Sales Quadruple

Amazon, which has already surpassed Walmart as the most valuable retailer in USA, is not quite popular for posting profits during their quarterly reports. In fact, after being founded in 1994, they posted their first profits after 7 years in 2001.

However, investors were pleasantly shocked when Amazon declared their financial results for Q3 2015, as they posted a record 2^nd consecutive profitable quarter after Q2 2015.

Compared to a loss of $437 million during Q3 of 2014, Amazon has posted a net income of $79 million during Q3 2015, which ended on September 30, 2015. During Q2 of 2015, they had posted a net income of $92 million.

In terms of revenue, Amazon has surprised everyone, as they posted $500 million more in revenues as anticipated. Overall, their revenue increased by 23% compared to last year, to touch whooping $25.4 billion. Their total employees have increased 49%, to become 222,000 as they have plans to hire 100,000 more employees in 2015-16.

Stock prices soared on their brilliant performance, and immediately after the announcement of results, their market capital swelled by $25 billion, thereby making them worth $260 billion as of now.

For 2015-16, Amazon is expecting revenue of $100 billion, which will make them one of the largest retailers all over the world. As per eMarketer, global eCommerce market is $1.34 trillion, out of which Amazon’s share is almost 10% as of now.

Amazon Cloud – Driving Insane Profits

Amazon’s Cloud computing business can be described as the single biggest reason for their excellent financial results, as ecommerce is still struggling to keep up the pace. Compared to last year, operating income from Amazon Web Services (AWS) increased 5 times to $521 million, which single handedly propelled their numbers.

Overall, AWS posted total sales of $2.085 billion, which is a growth of 78.35% compared to Q3 of 2014. AWS has total of 1 million+ customers now, across 190 countries.

Sales Quadruple in India

Amazon Senior Vice-President and CFO Brian T Olsavsky has said that compared to last year, festival sales in India (Navrati-Dussera-Pre Diwali) has increased by 4 times. This has prompted them to invest heavily in Indian operations, and makes it more formidable.

As per the Q3 report, Amazon India is right now India’s biggest ecommerce portal with 3 crore products as an average of 40,000 products were being added every day. If we speak only about customers, then the total number has increased by 230% compared to last year.

Olsavsky said, “So, we are very encouraged, as I said last quarter in India, and continue to invest there very heavily,”. He refused to share the exact details of the investment.

Compared to last year, Indian sellers have increased 250%, and 90% of them use Amazon’s own logistics and warehouse facilities.

This has encouraged them to triple their fulfillment capacity in India during 2014-15. As of now, Amazon has total of 21 fulfillment centers in India, which are operational across 10 states with total capacity of 5 million cubic feet.

Here is the official press release of their Q3 2015 financial report.